COT report: Mixed flows across commodities ahead of Powell; dollar short rebuilds

Commodities

The Bloomberg Commodity Index (BCOM) lost 0.7% in the week to 19 August as continued weakness in energy and metals—both precious and industrial—was only partly offset by strength across agriculture, led by softs where coffee futures surged on supply concerns. Risk appetite remained muted with many participants away for summer holidays, while those at their desks held back ahead of Powell’s Jackson Hole speech.

That speech ultimately delivered a dovish tilt, sparking a late-week risk-on rally in equities and commodities as traders priced a September rate cut as all but certain, pushing yields and the dollar lower.

Turning to the reporting week itself, flows from managed money accounts were mixed: natural gas, soybeans, and corn attracted buying, while crude oil, gold, and wheat remained under pressure.

Energy

Speculators extended their first-ever combined net short across the two major WTI contracts (CME and ICE) to 11,379 lots. ICE WTI—often traded against Brent in spreads—sat at a net short of 41,065 lots, while the net long in CME WTI collapsed 40% to 29,686 lots, a 17-year low. Adding to this, fresh Brent selling drove the combined crude net long (Brent + WTI) to a nine-month low of 171,316 lots.

Conviction at these levels rests on expectations of a well-telegraphed supply glut later this year and into 2026 weighing on prices. That said, positioning leaves the market vulnerable to a short-covering rally should fundamentals or technicals shift. Traders will be watching rising geopolitical tensions this week as the US threatens punitive tariffs against India for its continued purchases of Russian oil.

Metals

Gold saw an 8% reduction in its net long as traders stayed cautious and rangebound ahead of Jackson Hole. Elsewhere, positioning changes were limited. Silver gained around 3% on the week, edging closer to key resistance above USD 39, but speculative appetite remains lukewarm with the net long holding near 27,000 contracts—just above the one-year average and well below the June peak at 50,000. Copper saw only marginal adjustments.

Grains

Two weeks of aggressive short covering returned soybeans to a neutral stance. Corn shorts were pared back further despite expectations of a record US crop, while wheat continued to see selling pressure with prices being weighed down by heavy harvest flows from the US, Europe, and the Black Sea region.

Softs

Coffee dominated attention as US-imposed 50% tariffs on Brazilian beans, combined with frost damage concerns for next year’s crop, sent prices sharply higher. Speculative participation was more restrained, with the net long rising only 8% to 24,188 contracts—still far below the February peak at 65,717.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:

• They are likely to have tight stops and no underlying exposure that is being hedged
• This makes them most reactive to changes in fundamental or technical price developments
• It provides views about major trends but also helps to decipher when a reversal is looming

Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.